Niu v Lu (no 2)

[2025] NSWDC 257

District Court

New South Wales

Medium Neutral Citation:

Niu v Lu (no 2) [2025] NSWDC 257

Hearing dates:

On the papers

Date of orders:

14 July 2025

Decision date:

14 July 2025

Jurisdiction:

Civil

Before:

Cole DCJ

Decision:

(1) The plaintiff is to pay the defendant’s costs on the ordinary basis until 2 January 2024, and thereafter on an indemnity basis, as agreed or assessed.

Catchwords:

COSTS — Application for an order for costs on an indemnity basis where an allegation that documents were forged was not made out

Legislation Cited:

Uniform Civil Procedure Rules 2005

Cases Cited:

Niu v Lu [2025] NSWDC 103

Pirrottina v Pirrottina (No 2) [2024] NSWSC 1053

Category:

Consequential orders

Parties:

Shichao Niu (Plaintiff)
Yixin Lu (Defendant)

Representation:

Counsel:
H Fielder (Plaintiff)
A Rizk (Defendant)

Solicitors:
Longton Legal (Plaintiff)
EXC Law (Defendant)

File Number(s):

2023/154908

Publication restriction:

Nil

JUDGMENT

1. Judgment in relation to these proceedings was delivered on 2 April 2025 (Niu v Lu [2025] NSWDC 103 (‘the judgment’)). The plaintiff’s claims were dismissed.

2. The defendant, Mr Lu, now seeks an order for costs, partly on an indemnity basis.

3. Mr Niu submits that the appropriate order for costs is that the plaintiff pay the defendant’s costs of the proceedings on the ordinary basis, as agreed or assessed.

The defendant’s submissions

4. Mr Lu’s primary submission is that the Court should make the following costs order:

The plaintiff to pay the defendant’s costs on the ordinary basis until 2 January 2024, and thereafter on an indemnity basis, as agreed or assessed.

5. Mr Lu’s alternative submission is that, in the event that the Court is not inclined to make the order set out in [4] above, the following order should be made:

The plaintiff to pay the defendant’s costs of proving the matters set out in the Notice to Admit Facts and Authenticity of Documents dated 21 December 2023 on an indemnity basis, and all other costs on the ordinary basis, as agreed or assessed.

6. On 21 December 2023, pursuant to rules 17.3 and 17.4 of the Uniform Civil Procedure Rules 2005 (‘the Rules’), Mr Lu issued a Notice to Admit Facts and Authenticity of Documents (‘the Notice’) to Mr Niu. The Notice required Mr Niu to admit the authenticity of the ‘Repayment Agreement’ dated 24 August 2017, which was annexed to the Notice. The Notice also required Mr Niu to admit the following facts:

• That the plaintiff executed the ‘Repayment Agreement’,

• That the plaintiff executed the ‘Repayment Agreement’ on or about 24 August 2017,

• That the plaintiff is referred to as ‘Party A’ in the ‘Repayment Agreement’,

• That the ‘loan’ referred to in paragraph 1 of the ‘Repayment Agreement’ refers to money(s) ‘Party B’ borrowed in the amount of AUD260,000 between March and June 2017,

• That ‘Party B’ in fact borrowed from the plaintiff the amount of AUD260,000 as a ‘loan’ as referred to in paragraph 1 of the ‘Repayment Agreement’,

• That the terms of the ‘loan’ as between the plaintiff and ‘Party B’ is as set out in paragraph 1 of the ‘Repayment Agreement’,

• That the plaintiff knew that the ‘loan’ would be used by ‘Party B’ to partially settle ‘Party C’s’ ‘customer debts’ as referred to in paragraph 5 of the ‘Repayment Agreement’.

7. The plaintiff served a Notice Disputing Facts and Authenticity of Documents on 3 January 2024 in which the plaintiff said that he disputed the authenticity of the ‘Repayment Agreement’ and disputed every fact that the Notice asked him to admit.

8. The UCPR provide, in rules 42.8 and 42.9:

42.8   Dispute of fact subsequently proved or admitted

(1)  In this rule—

disputing party means the party who serves a notice disputing a fact under rule 17.3(2).

fact in dispute means the fact that is the subject of a notice served under rule 17.3(2).

requesting party means the party who is served with a notice disputing a fact under rule 17.3(2).

(2)  Unless the court orders otherwise, the disputing party must, after the conclusion of proceedings in which a fact in dispute is subsequently proved or is subsequently admitted by the disputing party, pay the requesting party’s costs, assessed on an indemnity basis, being costs incurred by the requesting party—

(a)  in proving the fact, or

(b)  if the fact has not been proved—in preparation for the purpose of proving the fact.

(3)  An entitlement to costs under this rule is not affected by any order as to costs unless that order makes particular reference in that regard.

42.9   Dispute of authenticity of document subsequently proved or admitted

(1)  In this rule—

disputing party means a party who serves a notice disputing the authenticity of a document under rule 17.4(2) or 17.5(3).

document in dispute means a document that is the subject of a notice served under rule 17.4(2) or 17.5(3).

requesting party means a party who is served with a notice disputing the authenticity of a document under rule 17.4(2) or 17.5(3).

(2)  Unless the court orders otherwise, the disputing party must, after the conclusion of proceedings in which the authenticity of a document in dispute is subsequently proved or is subsequently admitted by the disputing party, pay the requesting party’s costs, assessed on an indemnity basis, being costs incurred by the requesting party—

(a)  in proving the authenticity of the document, or

(b)  if the authenticity of the document has not been proved—in preparation for the purpose of proving the authenticity of the document.

(3)  An entitlement to costs under this rule is not affected by any order as to costs unless that order makes particular reference in that regard.

9. Mr Lu, as the requesting party under the rules, claims an entitlement to indemnity costs under rules 42.8 and 42.9. Mr Niu is the disputing party.

10. The issue to be decided in relation to both the authenticity of the ‘Repayment Agreement’ and the facts set out in the Notice is whether the ‘Repayment Agreement’ and the facts in dispute under the Notice were “subsequently proved or…subsequently admitted by the disputing party”.

11. In relation to the ‘Repayment Agreement’ the judgment says at [150] – [153], [184], [185] and [194]:

Has the plaintiff proven that the documents were forged?

150.   It has not been established on the balance of probabilities that Mr Niu’s signature on the Repayment Agreement was not written by Mr Niu. The possibility has not been excluded, but forgery has not been proven on the balance of probabilities.

151.   Mr Hobden’s conclusion with respect to Mr Li’s signature was similar to his conclusion with respect to Mr Niu’s signature. In Mr Hobden’s opinion, Mr Li's signature on both the Repayment Agreement and the Shareholding Proxy Agreement both fall within the natural variation within Mr Li’s sample signature set. However, Mr Hobden said that forgery could not be ruled out because Mr Li’s signature has a low level of complexity.

152.   Mr Ganas did not express a view in relation to Mr Li’s signature.

153.   There is no evidence upon which it could be found, on the balance of probabilities, that Mr Li’s signature was forged on the Repayment Agreement or the Shareholding Proxy Agreement.

…

184.   There is no evidence that Mr Li’s signature on either the Repayment Agreement or the Shareholding Proxy Agreement is a forgery. As I have said above, at [132] – [135], Mr Hobden said, in his report:

9(b)   There are sufficient consistent identifying features found in the Li specimen signatures to support the proposition that they have all been written by one person. These features include letter design, spacing, height ratios, slope and gradient of various strokes.

…

(d)   There are no significant dissimilarities between the questioned and specimen Li signatures. I observe no evidence of waver, tremor or any indication to support the proposition that the questioned signature is non-genuine. As with the previous Shichao Niu signature comparison, the difficulty in forming a conclusion in this matter is the assessment of whether the questioned Li signatures are copies written by a writer other than the specimen writer to the point that their status as forgeries is undetectable. In making this assessment I make the observation that the specimen signature design is made up of very few design features and there is a sufficiently large variation between the specimen signatures to provide an advantage to a skilled copy being made of them. In other words, the range of variation in the simple design of the specimen signatures allows a copier to more easily accidentally stray from the model they are copying but not exceed the variation found in other specimen signatures. I conclude that this signature is very vulnerable to a copier recreating the specimen signatures with little or no evidence of copying. Given this assessment I err on the side of caution and form an inconclusive opinion as to whether this signature is written by the specimen writer.

(e)   If the two questioned signatures are forgeries, I observe that they show similar variations between each other as are found between specimen examples and this would be evidence of a skilled copier as opposed to an unskilled copier.

185.   There is no basis to think that Mr Lu is a skilled copier of signatures.

…

194.   The sending of the draft Repayment Agreement by Mr Lu to Mr Li and Mr Li’s response to receiving that draft is consistent with there being no loan agreement between Mr Lu and Mr Niu. The existence of the signed Repayment Agreement and Shareholding Proxy Agreement further supports Mr Lu’s case. The Repayment Agreement and the Shareholding Proxy Agreement are consistent with the money sent to Midas’ bank account by Mr Niu in May 2017 having been sent as a result of the agreement set out in those documents, and not as the result of any oral loan agreement between Mr Niu and Mr Lu. It has not been established on the balance of probabilities that Mr Niu’s signature was forged on the Repayment Agreement, and there is no evidence upon which it could be found that Mr Li’s signature was forged on either document. The evidence of Mr Hobden, which I have accepted, is that the signatures of Mr Niu and Mr Li on the Repayment Agreement and the signature of Mr Li on the Shareholding Proxy Agreement fall within the range of natural variation in the manner in which Mr Niu and Mr Li write their signature. The existence of the signed Repayment Agreement and Shareholding Proxy Agreement is consistent with the sending of the draft Repayment Agreement from Mr Lu to Mr Li on 17 August 2017 and with the holding of shares in ICO by Mr Niu and Mr Lu.

12. It was submitted in written submissions on behalf of Mr Lu:

5.   In Niu v Lu [2025] NSWDC 103, the Court expressly or implicitly made findings to the effect that each of the disputed facts contained in the Notice to Admit were proven. Similarly, or at least implicitly, the Court held on the balance of probabilities that the Repayment Agreement was authentic, having determined that the Plaintiff had not satisfied its onus to demonstrate that the document was inauthentic. …

13. Mr Lu relied upon the observations of Rees J in Pirrottina v Pirrottina (No 2) [2024] NSWSC 1053 at [35] – [37]:

35. Obviously enough, the purpose of the Notice to Admit regime is to identify the facts which are seriously in dispute, rather than those which are not, such that the Court’s time can be devoted to resolving the real issues between the parties. To improve the efficacy of this regime, and to focus the mind of the party asked to admit facts, r 42.8 adds a costs incentive. Rule 42.8 provides the ‘default position’, casting the onus onto the party seeking an “otherwise order” to show why some different order should be made: Re Heavy Plant Leasing Pty Ltd [2017] NSWSC 1835 at [24] (per Brereton J). The rule is intended to encourage parties to consider realistically whether they will put the other party to the cost of proving each and every fact; the risk of a cost burden if the fact is proved provides an incentive to narrow the issues, shorten trials and save costs: Meadow Gem Pty Ltd v ANZ Executors and Trustees (Supreme Court (Vic), Byrne J, 11 June 1996, unrep) at 5. The purpose of the rule is to provide a sanction in situations where a fact which should be admitted is not admitted such that proceedings are needlessly prolonged: Millane v Nationwide News Pty Ltd [2004] NSWSC 1023 at [20] (Hoeben J).

36.   It is not necessary for a party to serve all their evidence in respect of a particular fact before serving a Notice to Admit, as this would undermine the rationale of the rule: Heavy Plant Leasing at [24]. As such, the party who has received a Notice to Admit must decide whether to admit those facts based on their assessment as to whether that fact is true, either from their own knowledge or from the evidence served in the proceedings in respect of that fact as at the date of the notice. The party receiving the notice may already know that the fact is true. The party may assess that that fact is likely to be established at trial, whether they know that fact to be true or not, and that in those circumstances it would be sensible to admit that fact rather than for the parties to continue to incur costs in seeking to establish, or to contest, that fact. The party may also admit a fact where they consider that the fact does not matter.

37.   It is not necessary for the party receiving the Notice to Admit to admit those facts if they are not in a position to assess the truth of the facts in the 14 day period; the Court may “otherwise order” where the receiving party acted reasonably in disputing those facts, or frame an order such that any costs consequences only ‘run’ from when they ought to have made the admission: Buzzle Operations Pty Ltd (in liq) v Apple Computer Australia Pty Ltd (No 2) [2010] NSWSC 490 at [16] (White J).

14. It was submitted that the same considerations would apply with respect to the authenticity of the ‘Repayment Agreement’.

15. It was further submitted that there was no basis for the Court to ‘otherwise order’ within the meaning of rules 42.8 and 42.9. The authenticity and integrity of the ‘Repayment Agreement’ was fatal to the plaintiff’s case, and its authenticity and the integrity of its content must have been relied upon by the Court.

16. The defendant submitted, in summary, that, had the plaintiff admitted the facts in the Notice, and admitted that the ‘Repayment Agreement’ was authentic, the inevitability of the failure of his case would have been clear from that point, so that the resources expended on the trial of the matter could have been saved. Thus all of the costs incurred by the defendant after 3 January 2024 were costs incurred in proving the authenticity of the ‘Repayment Agreement’ and proving the disputed facts.

The plaintiff’s submissions

17. The plaintiff argued that the Court made no positive finding that the ‘Repayment Agreement’ was authentic. The issue in dispute at trial was whether the plaintiff had succeeded in proving that the document was forged.

18. The plaintiff further argued that the defendant did not identify passages of the judgment in which the facts the subject of the Notice were explicitly found to have been proven.

19. The plaintiff submitted that the defendant’s claim for costs on an indemnity basis should be rejected.

Consideration

20. The claim under consideration in these proceedings, as set out in the judgment, was Mr Niu’s claim. Mr Niu bore the onus of proof on the balance of probabilities.

21. It is clear from paragraph [194] of the judgment, which is set out above at [11], that the Court treated the ‘Repayment Agreement’ as an authentic document which had been executed by all parties. The veracity of the facts set out in the ‘Repayment Agreement’, some of which are the facts the subject of the Notice, was accepted by the Court. The relevance of the ‘Repayment Agreement’ was that it was inconsistent with the alleged verbal loan agreements which Mr Niu relied upon in his claim.

22. It is implicit in the judgment that the ‘Repayment Agreement’ is authentic, that the facts set out in it are true and that the parties to the ‘Repayment Agreement’ being Mr Niu, Mr Lu and Mr Li, know that they are true.

23. It was not reasonable of Mr Niu to dispute the authenticity of the ‘Repayment Agreement’ or the veracity of the facts within it.

24. Mr Lu is entitled to costs on the indemnity basis from 3 January 2024.

Order

25. The following order will issue:

1. The plaintiff is to pay the defendant’s costs on the ordinary basis until 2 January 2024, and thereafter on an indemnity basis, as agreed or assessed.

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Decision last updated: 14 July 2025